Seattle Genetics pens $2B pact to bag Immunomedics’ drug

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Shares in Immunomedics rose 20% following news of the deal

Seattle Genetics is to pay $250 million upfront for the rights to Immunomedics’ solid tumor asset IMMU-132. The deal, the value of which could swell to $2 billion, puts Seattle Genetics in charge of filing for accelerated FDA approval of IMMU-132 in metastatic triple-negative breast cancer (TNBC) while also advancing the drug in other indications.

IMMU-132 is an antibody-drug conjugate of SN-38—the active metabolite of the chemotherapy drug irinotecan—and Immunomedics’ anti-TROP2 asset hRS7. The ADC is designed to target the TROP-2 receptors that are found in certain tumors and hustle the payload into the cells. As TROP-2 is overexpressed in certain cancers and relatively rare in healthy tissues, the approach could allow IMMU-132 to hit tumors hard while sparing the rest of the body.

Offloading the drug to Seattle Genetics, an ADC specialist, frees Immunomedics from up to $100 million in near-term development costs and gives it a partner that is potentially capable of ironing out lingering concerns manufacturing issues could hold the drug up. If Seattle Genetics can deliver on that, it could have a commercial product on its hands within 12 months.

“In just over three years, we have brought IMMU-132 through clinical developments in multiple indications, and have advanced the TNBC indication to a potential accelerated approval and launch by late 2017 or early 2018,” Immunomedics CEO Cynthia Sullivan said in a statement.

FDA acceptance of the BLA will trigger the first milestone in a series payments that could ultimately boost Immunomedics’ bank balance to the tune of $1.65 billion. A further $50 million is tied to the rights outside of the U.S., Canada and the European Union. Seattle Genetics and Immunomedics could ultimately decide to split these territories. Immunomedics also has the right to co-promote the ADC in the U.S..

Seattle Genetics is buying a 2.8% share in Immunomedics, too, and has the option to up its stake to 9.9%. However, Seattle Genetics cannot vote its stake at Immunomedics’ upcoming 2016 annual meeting of shareholders on February 16. The meeting will be where the fight between Immunomedics and activist investor venBio plays out. VenBio is seeking to get directors on the Immunomedics’ board.

Striking the deal with Seattle Genetics gives Immunomedics a boost going into the meeting. The terms of the deal mean there could be further twists, though. Immunomedics can keep negotiating “with a select number of parties” until February 19. If one of the parties makes a bid, Seattle Genetics can match any offer that beats its existing proposal. If Seattle Genetics opts against raising its bid, it will walk away with a termination fee.

Seattle Genetics was one of 33 parties to receive detailed due diligence information on IMMU-132. Several parties got as far as submitting term sheets, but Seattle Genetics, which Immunomedics said “moved aggressively”, was the first to get an offer accepted.

Shares in Immunomedics rose 30% following the news, while Seattle was down by more than 4%.